Yangon University of Economics

Department of Management Studies

EMBA Programme
EMBA 19th Batch (Campus)

Marketing Management (MBA-124)

Chapter 3: Collecting Information and Forecasting Demand

Course Teachers:
Dr. Khin Naing Oo: Rector (Retired), Department of Management Studies,
Yangon University of Economics

Assignment prepared by: Group-6 (EMBA 19th Batch (Campus)

1. Mg Myo Kyaw Swar Htwe Roll no. 14
2. Mg Than Htike Roll no. 10
3. Mg Kyaw Zayar Htun@James Roll no. 13
4. Ma Khine Sandar Tun Roll no. 50
5. Ma May Thet Lwin Roll no. 21
6. Ma Phyo Pa Pa Han Roll no. 7
7. Ma Mya Sandar Roll no. 44
8. Ma Khing Zar Lin Roll no. 19

Assignment Title: “Ferrero Case, Pages 117 ~ 119”

Questions 1.
Evaluate Ferrero Australia’s decision to invest in the hazelnut farm. What are the key
reasons for doing this?

Solution
Being 22nd most reputable company in the world and holding 8% of the world’s
chocolate market and 18.9% market share in Western European, Ferrero surely consumes
lots of hazelnut as raw material and input product in manufacturing its final product of
hazelnut chocolate. It means that there is a significant cost of hazelnut in its production
cost. Ferrero is very well known for doing lots of studies and research to understand the
market and consumers preferences and being almost one of the top consumers of
Hazelnut in its production process, Ferrero studied carefully and implemented its strategy
of backward vertical integration to take advantage of the economies of scope and
economies of scale as well in its production process.
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 Ferrero’s strategy gave it more control on the supply process by providing its
input product and raw material of hazelnut at cost price since they are the producers now,
this will give it a very competitive advantage in the market leading to a reduced
production cost and thus resulting to reduction in its selling price to the consumers, thus
gaining great advantage and competitive price.
Moreover, hazelnut exports business in Australia is worth $170 million annually
which means it is a very profitable market as a business itself in terms of hazelnut being a
new product line itself for Ferrero. Also, in implementing this strategy Ferrero would for
sure guarantee the quality of hazelnut used in its production process since the company
has a great commitment to maintaining excellence in quality, freshness, and innovations
since emphasis on quality is Ferrero’s key for success.

Ferrero's decisions to invest in the hazelnut farm are:

(1) When chocolate is extremely popular and global trend in Europe and around the world,
Ferrero decided to invest in the hazelnut farms with the mission of delighting customers
with unique products of the highest quality and integrity, and contributing to the well-
being of employers, customers, and the company.
(2) To meet Ferrero’s commitment to maintaining excellent in quality, freshness and
innovation,
Ferrero decide to invest in their own hazelnut farms in order to manufacture only in
places where it is sure it can deliver consistently and establish a secure retail supply chain.
(3) Australia is an emerging market where people have the capacity to buy chocolates at a
premium rate. Thus, before entering into Asia-Pacific Ferrero experimented in Australia.
The decision to invest in Hazelnut Farms in Australia is a good one, which is going to
benefit Ferrero in later stages.
(4) The investment will enhance the state’s economy and provide vital jobs in Australia.
Besides, it also encourages the other farms to grow hazelnut, therefore the local supply of
hazelnuts will reduce other manufacturing-related costs.
Ferrero has lots of community programs, and involved in food banks, grocery
industry donations to welfare agencies to feed the hungry, charity, support cancer
foundations, forest conservation methods and the abolition of child labor, which reflect
the importance of social responsibility image to Ferrero, and since this investment will
provide vital jobs in Australia, therefore, by investing in hazelnut farms, the company
will be reinforcing it commitment towards the society and occupying a good respectful
and distinct position in the minds of people as being a firm which pays back to society
and being very well committed to social responsibility.
All this would be playing a vital role in improving the brand and image of Ferrero
and help it fights the rumors and allegations that its products are causing childhood
obesity. Moreover, this investment will reflect positively on Australian economy since
more farmers will be encouraged to invest in growing hazelnut, thus providing more
employment and increasing overall returns from exports.

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 The company will be reinforcing it commitment towards the society and
occupying a good respectful and distinct position in the minds of people as being a firm
which pays back to society and being very well committed to social responsibility.

Question 2.
How can Ferrero use new technology to market its products better?

In today’s world technology forms an integral part of our everyday life and due to
this the business world is also shifting its focus towards technology looking for an
efficient way to market its products. The internet technology in particular has helped
greatly in bringing the customer closer to their favorite brands/products. Ferrero Australia
started a Facebook page and an I-Phone application to promote one of its products ‘Tic-
Tac’ and that proved to be a great strategy as that enabled them into releasing limited
editions of tic-tac, creating more brand awareness and share for the company.
Everyone agrees that online shopping has increased in huge numbers since the
Covid-19 pandemic and it seems this trend will continue even after the pandemic since
consumers find it easier to purchase online especially when the product is known or
previously consumed or bought by the customer, which in the case of Ferrero will give it
a great advantage and might increase its market share and revenues as well. Ferrero has
limited product range Nutella, Ferrero Rocher, kinder chocolates (Bueno and Surprise),
and Tic-tac, and all these products are very well known to the consumers for high quality
products and being a well-known product would make it easier for the customer to
purchase securely without being involved in the risk of bad quality or different product as
advertised as these are the main problems the online consumers face when purchasing
online, but this will not be at all applicable in the case of Ferrero’s online shopping.
Consumers can buy online any of Ferrero’s products knowing its quality, therefore,
Ferrero should invest in online shopping for all its products and maybe bundling its
products for boosting the sales. The company could have an online shopping site as well
as invest in a “Ferrero Online Purchase Mobile Applications”, where in this way the
purchase is only one click away.
Another technology that Ferrero should consider in investing in, is creating
powerful, strong very well-organized pages on social media platforms like Facebook,
Instagram, YouTube, Twitter and other websites. These platforms are powerful
marketing and advertising tools that could attract consumers and increase Ferrero’s
market share. Social media could also play a good role in advertising and reinforcing
Ferrero’s commitment toward the society by publishing all what the firm is providing to
the community and on other hand it can play the role of front-line defense against any
rumors or allegations that could negatively affect the brand name or reputation of the
company which it is obvious that it is of a high importance to Ferrero which it is
obviously reflected in its high investments in all community programs.

Many social networking strategies could be followed to advertise and market

products and image of Ferrero, like online prizing schemes, videos, posts, games, or even
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sponsor social media influencers and bloggers with high numbers of followers who can
boost sales of their products. This would create a strong brand awareness for Ferrero and
build long-term relationships with current customers that is of a great importance for
premium and luxury brands like Ferrero.
Mobile marketing and email marketing are the new marketing strategies to
promote the product. The mobile company and email service can send the subscribers up
to 1,000 messages and over 10,000 emails per day for low costs. Ferrero should send
personalized emails and messages to the loyal customers about the offer, coupons for new
product. In addition, Ferrero should send the personalized emails and messages on the
loyal customers’ important days like birthdays, anniversaries, festivals and valentine days
to show them how they value the customers and how important they are for company.
Traditional Television and radio commercials would still be technological ways to
boost Ferrero’s sales but they can advertise their products in a unique and modern
strategies, as there are lots of new TV advertisements methods, like TV programs
especially for Ferrero, or sponsoring certain high rated TV shows. Also, Ferrero could
increase its investment in sponsoring most popular sports with high rates of audience in
each of the countries that they are targeting, example Cricket League in India is the most
viewed and followed sports, or American Football in USA, Nasar.
Artificial intelligence is a trend in modern days, and lots of technologies and
companies are investing in it, Ferrero might consider sponsoring certain Research and
Development (R&D) departments and labs in certain universities that have Artificial
Intelligence programs or funding to create ones in universities that don’t have. This will
improve its image and brand related to social responsibility and be recognized as a
company that invest in the students who are the future of any society.
Taking advantage of new technologies to increase its sales should surely include
increase investments in Research and Development (R&D) in manufacturing and
production, find ways to reduce its cost to gain competitive advantage, and since the 50%
hazelnut, 50% Cocoa combination could be viewed as the invention that is the sole
reason of the existence of Ferrero, the company should invest in finding new modified
flavors, new combinations, maybe new distinctive and revolutionary item or even a
distinctive full product line that might put it again as a pioneer in food industry and create
a blue ocean market for the company that could give her additional extra years of market
power.